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Shares Of BioFuel Up +40% Following M&A Announcement

In a press release on Wednesday, BioFuel Energy (NASDAQ: BIOF) announced that it has entered into a definitive agreement with affiliates of Greenlight Capital (NASDAQ: GLRE) and James Brickman to acquire equity interests on JBGL Builder Finance and specific subsidiarties of JBGL Capital, LP.

JBGL, currently owned and controlled by Greenlight and Brickman, will be acquired by BioFuel for $275 million, payable in cash and common stock. The breakdown of the cash portion of the sale will be funded from proceeds of a $70 million rights offering and $150 million in debt financing provided to BioFuel Energy by Greenlight.

The release states, "In response to a proposal from Greenlight and Brickman on March 28, 2014, the board of directors of the Company formed a special committee of independent directors to evaluate the proposed transaction and possible alternatives for the Company.

The Company's board of directors, acting upon the unanimous recommendation of the special committee, approved the transaction, determined to exempt the transaction under the Company's Section 382 rights plan and resolved to recommend that the Company's stockholders vote to approve the transaction and related matters. The special committee negotiated the terms of the transaction with the assistance of its legal and financial advisors."

Completion of the acquisition is contingent to a variety of conditions including the receipt of the approval of a majority of BioFuel shareholders and the completion of rights and authorization for listing the stock on the Nasdaq stock market.

Shares of BioFuel Energy closed at $5.78 on Tuesday. Shortly after Wednesday's opening bell, shares shot up 43 percent to $8.27, but are starting to subside.